1. Fringe Benefits Tax

2. Overview FBT payable by employer
Legislation contained in the Fringe benefits tax assessment Act 1986
FBT year runs from 1 April to 31 March
FBT returns must be prepared and lodged by 21 May following the end of FBT year

3. What is a Fringe benefit?
Non-cash Benefits provided by an employer to an employee
or associate of employee
Employees past present and future employees
Items specifically excluded
Salary & wages
Superannuation fund contribution
Payments upon termination of employment

4. Calculation of FBT 1. Identify type of fringe benefit
2.Calculate taxable value of fringe benefit
3.Gross up taxable value of fringe benefit
4.Multiply the FBT rate by the grossed up taxable value of the fringe benefit

5. Determining whether FBT applies
Is there a benefit?
Is it provided during the year of tax?
Is it provided by an employer or third party
Is it provided to an employee?
Is it provided in respect of employment

6. 2 gross up factors Type 1 Type 2 2.0647 GST included in benefits
1.8692
No GST in benefit

7. Reportable Fringe benefits
Reported on a taxpayer’s Payment summary, but are not assessable income
Relevant for determining Medicare Levy Surcharge liability
Individual Fringe benefits of $2,000 or less are not reportable

8. Types of Fringe benefits
Car
Debt waiver
Loan
Expense payment
Housing
Living-away-from-home allowance
Airline transport
Board
Meal entertainment
Tax-exempt body entertainment
Car parking
Property
Residual

9. Calculating taxable values
Each type of fringe benefit has its own valuation rules
General principles:
Concessions are given for “in-house” benefits
Unreimbursed recipient contributions reduce taxable value
The “otherwise deductible” rule may also apply to reduce the taxable value
Reduction amounts are subtracted from the taxable value (Div 14)

10. Otherwise deductible Rule
Generally, reduces the taxable value by the deduction that the employee would otherwise have received if he or she had incurred the expenditure to acquire the benefit
Only applies to some fringe benefits:
loan fringe benefits
expense payment fringe benefits
airline transport fringe benefits
board fringe benefits
property fringe benefits
residual fringe benefits

11. Car fringe benefit –Statutory Method
A: Base value of the car
B: Statutory fraction
C: Number of days benefit provided
D: Number of days in the FBT year
E: Recipient’s contribution
Taxable Value=ABC/D-E
MTG 35180/35190

12. Car fringe benefit- cost method
C: Operating cost of the car, including deemed depreciation and interest
BP: Business percentage
R: Recipient’s contribution
Taxable value=(C*100%-B))-R
MTG 35230/35240

13. Operating Cost method Uses actual costs of vehicle
Deemed depreciation See MTG

14. Debt Waiver Fringe benefit
Taxable value of a debt waiver fringe benefit is the amount of the payment or repayment that has been waived (s 15)
MTG 35270

15. Loan Benefit
Loan Fringe benefits arise when employer makes loan to employee at at a low or interest free rate
Taxable value of the loan is difference between the interest due on the loan at benchmark rate(7.4% 31 March 2013)
And the interest charged
Operates subject to “otherwise deductible” rule

16. Expense payment Fringe benefit
Taxable Value
Gross up
School Fees(no GST)
Amount paid
Type 2
Golf Club Fees(inc GST)
Type 1
Holiday expenses(inc GST)
Amount Paid
Telephone expense(inc GST)
Amount Paid less deductible portion
Home Mortgage Payments
(No GST)
MTG

17. Property Fringe Benefits
A Benefit arises when Property is provided to employees at a discount by the. These are also describe as “in-house” fringe benefits
Exemptions
Goods supplied and consumed on employers premises
-First 1,000 of the taxable value is exempt

18. Taxable Value of Prpoerty fringe benefits
If employer is Retailer
The taxable value of an in-house fringe benefit is generally 75% of the lowest price charged to public for the benefit less any amount actually paid for the benefit
If employer is wholesaler, taxable value is the employer’s lowest selling price less amount paid by employee

19. Car Parking Fringe benefits
Car parking facilities provided by an employer to an employee may be a taxable fringe benefits
The car must be parked on business premises
A commercial car park is within one kilometre of business premises
The Commercial car park must also charge members of the public more per day than the car parking threshold(currently $7.71)

20. Exemptions Mobile phone Protective clothing Calculator, briefcase
Taxi travel to and from employer premises
Minor with a value <$300
See MTG 35645